Williams-Sonoma profits near 60 percent

Don Hogsett -- Home Textiles Today, May 31, 2004

Helped by resurgent same-store sales, which bounded back from year-ago weakness, including a hefty double-digit gain at its Pottery Barn format, first-quarter profits at Williams-Sonoma Inc. skyrocketed 59.7 percent, to $21.4 million from $13.4 million last year.

Driving the big earnings gain was an across-the-board improvement in same-store sales, with every retail format doing better, and several rebounding from year-before declines. Overall same-store sales increased 6.8 percent, compared with a prior-year decline of 0.8 percent. The biggest gain was scored at the Pottery Barn segment, where comps shot up 10.2 percent, versus a year-ago slide of 4.4 percent, helped by strong sales of home furnishings.

Overall sales at the diversified retailer climbed 19.4 percent, to $640.9 million from $536.8 million. Sales in the core retail stores increased 15.3 percent, to $349.4 million from $303.1 million. The fast-track direct-to-customer segment, catalogs and Internet, moved ahead at an even faster pace, rising 24.2 percent, to $246.6 million from $198.6 million.

Providing a lift to the bottom line, in addition to stronger sales, average gross margin improved modestly, to 38.3 percent of sales from 38.1 percent a year ago, driven largely by a reduction in occupancy costs and freight-to-store expenses, as well increased shipping costs.

Looking ahead to the second quarter, now in progress, the retailer forecast sales in the range of $669 to $685 million, a gain of 15 to 18 percent. Same-store sales are forecast to grow by 1 to 3 percent. Earnings per share are forecast in the range of $0.18 to $0.20 per diluted share, up 20 to 33 percent.

Williams-Sonoma Inc.

Qtr. 5/2 (x000)

2004

2003

% chg

a-Total sales, including retail sales of $349.4 million, up 15.3 percent from $303.1 million last year; retail shipping fees of $1.7 million, up 15.1 percent from $1.5 million last year; direct-to-customer sales of $246.6 million, up 24.2 percent from $198.6 million; and direct-to-customer shipping fees of$43.2 million, up 28.3 percent from $33.7 million during the prior-year first quarter.
b-First-quarter results include interest expense of $136,000, compared with $316,000 in interest income a year ago.